As we previously reported here, in 2016, the U.S. Equal Employment Opportunity Commission (“EEOC”) changed the pay data reporting requirements under the EEO-1 report, requiring employers with 100 or more employees to annually report employees’ IRS Form W-2 compensation information and hours worked. However, in 2017, following President Trump’s election, the OMB indefinitely stayed the deadline for employers to comply with the Obama-era revisions to the EEO-1 form, pending review of the potential burdens of such data collection under the Paperwork Reduction Act. (See our prior post here).

The stay remained in place until Judge Chutkan of the U.S. District Court for the District of Columbia released her March 4 order rejecting the OMB’s decision to stay the pay data collection requirement. The court reasoned that the OMB failed to prove either that relevant circumstances regarding the data collection had changed, or that the original burden estimates were materially in error. Further, the court held that the stay was arbitrary and capricious. Therefore, the judge ordered that “the previous approval of the revised EEO-1 form shall be in effect.”

The order leaves many open questions concerning how or when employers will be required to respond. The EEOC’s EEO-1 survey will open on March 18, 2019, and the deadline to submit EEO-1 data has been extended to May 31, 2019. It is still unclear whether the EEOC will require employers to submit the pay data information on that deadline, or if the pay data reporting will begin in a future filing cycle. Also, an appeal of the judge’s order lifting the stay is likely, and with that appeal could come a reinstatement of the stay. As this issue is ongoing, we will keep you updated as more developments arise.

On January 17, 2019, New Jersey’s governor and state legislators agreed to a deal that will raise the state’s minimum wage to $15.00 by 2024. The current minimum wage in New Jersey is $8.85 an hour. Under the new law, the state’s minimum wage will increase to $10.00 an hour on July 1, 2019, and to $11.00 on January 1, 2020, with a steady one-dollar increase occurring every January 1 until 2024.

In addition, on February 19, 2019, Illinois’s governor signed a law that will raise the state’s minimum wage to $15.00 by 2025. The current minimum wage in Illinois is $8.25 an hour, but under the new law it will increase to $9.25 an hour on January 1, 2020, and $10.00 on July 1, 2020. The minimum wage will then increase by one dollar per year every January 1 until 2025.

Further, the City Council of Fremont, California unanimously voted to increase its minimum wage to $15.00 per hour by July 1, 2020 for employers with more than 26 employees and July 1, 2021 for employers with 25 of fewer employees. Similarly, Pasadena, California’s City Council voted to raise the city’s minimum wage to $15.00 an hour by July 1, 2020 for larger employers and July 1, 2021 for smaller employers.

Lastly, on March 1, 2019, the minimum wage in both the city and county of Santa Fe, New Mexico increased to $11.80 per hour.

Michigan Paid Sick Leave

As we previously reported here, Michigan’s new Paid Medical Leave Act is scheduled to go into effect soon. Employers with non-exempt employees working in Michigan have until March 29, 2019 to get their policies and recordkeeping systems ready for the new law.

New York City Prohibits Hair Discrimination; Requires Employers to Provide Lactation Room

The New York City Commission on Human Rights recently released legal enforcement guidance regarding race discrimination on the basis of hair. The guidance specifies that New York City employers with four or more employees cannot discriminate against Black employees by prohibiting “twists, locs, braids, cornrows, Afros, Bantu knots, or fades which are commonly associated with Black people.” Further employers cannot have grooming policies that require employees to alter the state of their hair to conform to the company’s appearance standards (including requiring employees to straighten or relax their hair), and policies cannot ban hair that extends a certain number of inches from the scalp, thereby limiting Afros. Covered employers that choose to enact grooming or appearance policies should be aware that they cannot prohibit or discourage such hairstyles, either explicitly or implicitly, and cannot discriminate against and/or harass Black employees based on their hair texture or hairstyle.

As we previously mentioned here, effective March 18, 2019, New York City employers with four or more employees must provide a sanitary “lactation room” for employees needing to express milk. The room cannot be a restroom, and both the lactation room and a refrigerator suitable for breast milk storage must be within a close proximity to the work area of the employee using it. The lactation room must have an electrical outlet, a chair, a surface on which to place a breast pump and other personal items, and nearby access to running water. Further, by the same date, covered New York City employers must implement a written lactation accommodation policy, which must state that employees have the right to request a lactation room and identify the process for requesting a lactation room.

New Jersey Expands Employee Leave and Benefits Laws

On February 19, 2019, New Jersey’s governor signed Assembly Bill 3975, which significantly broadens the reach of the New Jersey Family Leave Act (“NJFLA”) and the New Jersey Temporary Disability Benefits Law (“NJTDBL”). This new law imposes additional obligations on smaller employers who were previously exempt from the NJFLA. Moreover, the law amends the state’s Security and Financial Empowerment (“SAFE”) Act by granting paid family temporary disability leave benefits for covered time off involving domestic and sexual violence.

The new law extends coverage of the NJFLA to employers of 30 or more employees beginning June 30, 2019 (previously only covered employers with 50 or more employees). Additionally, the following changes to the NJFLA are effective immediately:

The law expands the once restrictive definition of “family member” to also include parent-in-law, sibling, grandparent, grandchild, domestic partner, or any other blood relative as well as any other individual with which the employee has a close, family-equivalent relationship; the new definition matches that in other New Jersey leave laws;

The law revises the definitions of “family leave,” “child,” and “parent” to provide broader protections for foster parents and people who become parents through a gestational carrier;

The law broadens the leave period for employees taking reduced-schedule FLA leave from 24 consecutive weeks to 12 consecutive months; and

The law requires employers to allow employees to take intermittent leave for birth or adoption of a child, placement of a foster child or the birth of a child via a gestational carrier.

Further, the new law expands the monetary benefits that are available under the NJFLA and the NJTDBL for leaves beginning on or after July 1, 2020. First, the law will increase the number of weeks for which benefits are available from 6 to 12 weeks in any 12-month period, and will increase the amount of intermittent leave available for covered employees from 42 to 56 days. In addition, employees who take leave under the NJTDBL will be entitled to 85% of their average weekly wage, subject to a maximum of $860 per week.

Finally, as the new law provides for penalties for failure to post required notices and provides money for public outreach to inform employees of their rights, New Jersey employers should promptly review and update their leave policies to comply with these new requirements.

]]>https://www.employmentlawworldview.com/state-law-round-up-minimum-wage-hikes-il-nj-ca-nm-michigan-paid-sick-leave-new-york-employee-rights-new-jersey-leave-and-benefits-expansion-us/feed/0shennan.harris@squirepb.com, melissa.legault@squirepb.comDéjà Vu All Over Again: U.S. Department of Labor Previews New(-ish) FLSA Overtime Exemption Requirements (Again)https://www.employmentlawworldview.com/deja-vu-all-over-again-u-s-department-of-labor-previews-new-ish-flsa-overtime-exemption-requirements-again/
https://www.employmentlawworldview.com/deja-vu-all-over-again-u-s-department-of-labor-previews-new-ish-flsa-overtime-exemption-requirements-again/#respondThu, 07 Mar 2019 23:26:22 +0000https://www.employmentlawworldview.com/?p=7354Continue Reading]]>For years – spanning two Presidential administrations – employers have been awaiting long-anticipated updates to the overtime exemption regulations to the Fair Labor Standards Act (FLSA). Since 2004, to be exempt from the FLSA’s overtime compensation requirements under the so-called “white collar” exemptions (e.g., executive, administrative, professional employees), employees must be paid on a salary basis at least $455/week as well as perform specific, defined exempt duties. In 2016, during the latter stages of the Obama administration, the Department of Labor announced that it was implementing new regulations that would raise the salary threshold requirement to $913/week, a substantial increase that would have resulted in as many as four million exempt workers being reclassified to non-exempt overnight. But on November 22, 2016, shortly after the Presidential election, a federal district court judge in Texas enjoined the new salary threshold rule and, despite some further (and still ongoing) appellate skirmishing, effectively invalidated its implementation.

Since then, employers have looked to the present administration wondering whether, when, and to what extent the FLSA regulations may change. After much speculation, the Department of Labor released on March 7, 2019 a proposed rule to amend the overtime regulations. Under the proposed rule, workers who earn less than $679 per week ($35,308 per year) would be automatically eligible for overtime for all hours worked beyond 40 hours per workweek. This is an increase from the current threshold, but not as high as the threshold proposed by the Obama administration. Further, the salary threshold would be revisited every four years through new proposed rulemaking, rather than subject to an automatic annual lockstep increases as the Obama administration had endorsed.

The new proposed threshold incorporates methodology used in 2004, under the Bush administration, for determining which workers should, based on wages alone, be treated as overtime-eligible, but has been adjusted to reflect current average wages. Because the methodology has survived scrutiny for so many years, the new proposed rule may be less susceptible to judicial challenge for overreach than the Obama-era proposal. And, although not as sweeping as the prior proposed rule, if enacted, the amended regulations may result in as many as one million workers becoming overtime-eligible. There is no anticipated change to the duties tests, so reclassification – if any – will be based on salary alone. After a period of notice and comment rulemaking, a final version is expected shortly before the 2020 election. We will continue to update you as the rule advances and if and when it is adopted, along with advice on how to implement cost-effective business solutions to minimize the added costs associated with this change.

]]>https://www.employmentlawworldview.com/deja-vu-all-over-again-u-s-department-of-labor-previews-new-ish-flsa-overtime-exemption-requirements-again/feed/0laura.robertson@squirepb.comDepartment of Labor Says Employers Are Not Required to Pay Tipped Employees the Full Minimum Wage for Non-Tipped Activities (US)https://www.employmentlawworldview.com/department-of-labor-says-employers-are-not-required-to-pay-tipped-employees-the-full-minimum-wage-for-non-tipped-activities-us/
https://www.employmentlawworldview.com/department-of-labor-says-employers-are-not-required-to-pay-tipped-employees-the-full-minimum-wage-for-non-tipped-activities-us/#respondTue, 19 Feb 2019 23:50:00 +0000https://www.employmentlawworldview.com/?p=7328Continue Reading]]>Under the Fair Labor Standards Act (“FLSA”), employers are required to pay non-exempt employees a minimum hourly wage of $7.25. However, employers with “tipped employees” are able to pay such employees a cash wage of $2.13 per hour and take a “tip credit” toward their minimum wage obligation to make up the difference between the cash wage and the federal minimum wage. Importantly, the FLSA differentiates between tipped employees who perform “dual tasks,” such as incidental duties that do not produce tips, and employees who have a “dual job,” meaning they are employed by the same employer to do both a tipped job and a non-tipped job. The U.S. Department of Labor’s Wage and Hour Division (“WHD”), charged with enforcing the FLSA, recently changed its position on when employers must pay employees with “dual tasks” the full minimum wage for time spent on non-tipped activities.

On November 8, 2018, WHD issued an opinion letter stating that employers are allowed to pay tipped employees a tipped wage less than the federal minimum wage for hours spent on non-tip-producing duties that are incidental to their main job. Previously, the WHD operated under an Obama administration mandate known as the “80/20” rule, which required employers to pay tipped workers the full minimum wage for time spent on side-work duties that do not result in tips (such as filling saltshakers and rolling silverware) when those duties make up at least 20 percent of the worker’s weekly hours. WHD’s Department’s November 2018 opinion letter altered this policy, explaining that employers are not required to pay tipped employees minimum wage for hours spent on non-tip-generating work incidental to their main job.

On February 15, 2019, WHD issued two new guidance documents supporting the position outlined in the November 2018 opinion letter. First, it revised its internal Field Operations Handbook (at section 30d00(f)) and updated its website to be consistent with its new enforcement policy. In addition, it released Field Assistance Bulletin 2019-2, which explains WHD’s reasons for the policy change, among them, that the previous policy created confusion regarding whether federal law requires certain related, non-tipped duties to be excluded from the tip credit. Further, the bulletin states that the new interpretation applies to investigations both prospectively and retroactively, meaning that the change could impact ongoing litigation between tipped workers and their employers.

WHD’s new policy likely will provide more clarity for employers with tipped workers. However, it is important for these employers to remember that they are still prohibited from keeping tips received by their employees, regardless of whether the employer takes a tip credit under the FLSA. Further, employers are still required to make up the difference if an employee’s tips combined with his or her direct (or cash) wages do not add up to the minimum hourly wage of $7.25 per hour. Finally, this policy clarification applies only to interpretations of the FLSA; state minimum wage laws may differ, so employers are encouraged to consult with local counsel to ensure that they are compliant with both federal and state wage payment laws.

]]>https://www.employmentlawworldview.com/department-of-labor-says-employers-are-not-required-to-pay-tipped-employees-the-full-minimum-wage-for-non-tipped-activities-us/feed/0melissa.legault@squirepb.com, laura.robertson@squirepb.comUS Supreme Court Begins New Term with Three Arbitration Cases Set for Oral Argument in Octoberhttps://www.employmentlawworldview.com/us-supreme-court-begins-new-term-with-three-arbitration-cases-set-for-oral-argument-in-october/
https://www.employmentlawworldview.com/us-supreme-court-begins-new-term-with-three-arbitration-cases-set-for-oral-argument-in-october/#respondMon, 08 Oct 2018 00:31:37 +0000https://www.employmentlawworldview.com/?p=7050Continue Reading]]>We’ve been keeping you apprised of the many developments over the past few years coming from the United States Supreme Court and other courts concerning agreements between employers and their employees to arbitrate disputes arising out of the employment relationship. The Supreme Court’s decision last term in Epic Systems v. Lewis, which we discussed in our post here, garnered significant attention as it addressed the National Labor Relations Board’s (“NLRB”) several-years’-running position that arbitration agreements with class or collective litigation waivers illegally restrain employees in the exercise of concerted activity protected under the National Labor Relations Act (“NLRA”). In Epic Systems, the Supreme Court rejected the NLRB’s position, holding that class action litigation is court procedure and not a substantive right or an activity protected under the NLRA. The Court thereby preserved employers’ ability to limit disputes to individual claims in arbitration without running afoul of employee rights under the NLRA to act together to improve their work environment.

The Supreme Court’s new term began as it always does, on the first Monday in October. On the Court’s docket in its first month are three more arbitration cases – one of which also deals with class action litigation. All three cases involve various aspects of the reach or interpretation of the Federal Arbitration Act (“FAA”).

The Supreme Court heard its first arbitration case during Wednesday, October 3’s oral arguments in New Prime, Inc. v. Oliveira, (the First Circuit’s opinion below reported at 857 F. 3d 7). In this case, the Supreme Court is being asked to determine whether Section 1(a) of the FAA, which excludes certain transportation “workers” from the FAA’s purview, applies to independent contractors, in addition to the employees, of a transportation company. The Supreme Court also has been asked to address whether the application of the Section 1(a) exemption is a threshold issue that should be decided by a court before ordering a case to arbitration, even when the parties’ arbitration agreement contains a clear delegation provision assigning questions of the arbitrator’s jurisdiction to the arbitrator and not a court. In the case below, the First Circuit answered “yes” to the first question, finding that the term “workers” under Section 1(a) of the FAA includes traditional employees and independent contractors. If the Supreme Court adopts this interpretation, it could have a noteworthy impact on the transportation industry, which widely relies on the services of independent contractors. These individuals, in addition to employees, may not be subject to arbitration despite otherwise valid arbitration agreements between themselves and a transportation company. This outcome also could lead to the expansion of other laws that have traditionally been limited to the employer/employee relationship and not independent contractors. In the underlying decision, the First Circuit also held that the determination of whether the claims at issue are exempt from the FAA under Section 1(a) is a “gateway” question to arbitrability that should be answered by a court, regardless of a valid delegation provision in an arbitration agreement. The upshot of this outcome is that despite contractual language agreed between the parties stating that an arbitrator should decide whether he or she can hear a case, in part or whole, the Section 1(a) question is an exception to such a provision. Early commentators on the Oliveira oral argument believe the Justices’ lines of questioning clearly indicated that the Court leans in the direction of a broad interpretation of the FAA exemption to include independent contractors, and that courts, and not arbitrators, should analyze the application of the exemption.

Lamps Plus, Inc. v. Varela, is scheduled for oral argument on October 29, 2018. It comes to the Supreme Court from the Ninth Circuit (opinion is reported at 701 F. App’x 67). This case arises out of the Supreme Court’s 2010 decision in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., wherein it held that state courts cannot order class arbitration unless there is a contractual basis to do so. In Varela, the Ninth Circuit held that, under the contract law of California (the state by which the arbitration agreement at issue is governed), the parties’ intention to allow class and collective claims in arbitration could be inferred from the agreement’s commonly-used language, which in this case was, “arbitration shall be in lieu of any and all lawsuits or other civil proceedings.” The lower court concluded that the phrase “other civil proceedings” includes class actions, therefore, there was a contractual basis to find that the parties meant to replace class litigation in court with class litigation in arbitration. In its petition to the Supreme Court, Lamps Plus opposed the Ninth Circuit’s decision by arguing that under the FAA, class arbitration is disfavored because it is inconsistent with the purpose of arbitration to streamline litigation. Accordingly, it argued that parties to an arbitration agreement must clearly and explicitly authorize class arbitration, or be limited to individual, bilateral litigation in the arbitration forum. This case provides the Supreme Court with the opportunity to define the contours of its holding in Stolt-Nielsen by explaining just how parties can indicate their assent to participate in class arbitration and whether the FAA precludes an inference in favor of class arbitration based on general contract language that does not specifically address class or collective litigation procedures. A less likely, but possible outcome would be for the Court to defer the FAA issue by ruling that the Ninth Circuit misapplied California contract law.

Also set for oral argument on October 29, 2018, is the third arbitration case on the Supreme Court’s docket this term. Although not an employment case, Henry Schein v. Archer & White Sales, Inc. (Fifth Circuit Court of Appeals decision reported at 878 F.3d 488), like Oliveira, addresses whether a court or an arbitrator should be charged with making threshold determinations about the arbitrability of claims. In this case, the parties had entered into an arbitration agreement stating they would resolve all legal disputes in arbitration, except claims for injunctive relief and involving intellectual property rights. The plaintiff’s case included a claim that sought injunctive relief among other remedies; he thus argued that the court where the case was filed should refrain from ordering the parties to arbitration because the claim seeking injunctive relief was not arbitrable. The defendants argued that the terms of the arbitration agreement provided that any questions about the arbitrability of the case or a specific claim was to be decided by the arbitrator. The trial court’s magistrate judge found that the arbitration agreement’s delegation language, when combined with the language carving out claims for injunctive relief, could reasonably be interpreted in both manners suggested by the parties. However, the District Court judge and the Fifth Circuit both discarded this interpretation, and instead found that the defendant’s claim that the parties to the arbitration agreement intended the arbitrator to handle the arbitrability of a carved-out claim was “wholly groundless.” Although its analysis was brief, the Fifth Circuit held that the language of the parties’ arbitration agreement was clear and the court should determine the arbitrability of the entire litigation when it included a carve-out claim, such as injunctive relief. The defendants’ case before Supreme Court argues that the “wholly groundless” doctrine used by the Fifth Circuit is too subjective and violates the federal policy favoring arbitration expressed in the FAA. Having suggested their lean toward court determination of arbitrability issues in the Oliveira argument, the Supreme Court may take a similar tact in Henry Schein. On the other hand, the Court could also distinguish this case by the fact that these parties agree they have a valid arbitration agreement that governs the terms of their arbitration, and not an overarching statutory exemption to arbitration such as exists in Oliveira.

Although employers can continue to feel confident that arbitration agreements with their employees are a valid mechanism to limit employment-related disputes to the arbitration forum, some of the contours of these agreements continue to be defined through ongoing litigation, such as the cases above. The outcomes in these cases may impact how employers draft their arbitration agreements to ensure parties get the exactly the arbitration they are bargaining for. Stay tuned as we continue to update you on the outcomes of these cases, and their effects on employer arbitration agreements.

]]>https://www.employmentlawworldview.com/us-supreme-court-begins-new-term-with-three-arbitration-cases-set-for-oral-argument-in-october/feed/0daniel.pasternak@squirepb.comEyes and Ears on the FLSA – U.S. Department of Labor Issues New Opinion Letters and Schedules Public Listening Sessions (US)https://www.employmentlawworldview.com/eyes-and-ears-on-the-flsa-u-s-department-of-labor-issues-new-opinion-letters-and-schedules-public-listening-sessions-us/
https://www.employmentlawworldview.com/eyes-and-ears-on-the-flsa-u-s-department-of-labor-issues-new-opinion-letters-and-schedules-public-listening-sessions-us/#respondWed, 05 Sep 2018 16:15:13 +0000https://www.employmentlawworldview.com/?p=6997Continue Reading]]>On August 28, 2018, the Wage and Hour Division of the United States Department of Labor (“WHD”) issued four new opinion letters interpreting various aspects of the federal Fair Labor Standards Act (“FLSA”). In addition, the WHD has announced plans to analyze and consider changes to the FLSA’s white collar overtime exemption regulations applicable to executive, administrative, professional, and outside sales employees. To support this effort, the WHD has scheduled five public listening sessions in various locations across the country (a list of which you can find here), which it invites the public to attend and provide comment. The key questions to be addressed at these sessions surround the pros and cons of adjusting the salary basis – the salary level employees must meet in order to be deemed exempt under the white collar overtime exemptions. We will be sending representatives and encourage you to contact us with any questions or feedback you would like us to raise at these sessions.

Regarding the opinion letters, as you may recall from our prior blog posts (for example, here and here), the WHD resumed issuing opinion letters in mid-2017. Opinion letters are official written interpretations of the FLSA, as those laws apply in specific factual situations. Although the opinion letter topics are generally brought to the WHD by a specific person or entity, as you will see from below, many of the situations they present have broader applicability to a range of employers. Keeping abreast of the WHD’s opinions can help employers avoid the pitfalls embedded in the nuances of the laws it enforces. Below is a summary of these new opinion letters, and a link their text:

Voluntary employer-sponsored wellness events not compensable time under the FLSA. Employees who voluntarily participate in employer-sponsored wellness activities, such as biometric screening, health and gym classes, or benefits fairs that are designed to lower an individual employee’s health insurance policy premiums and provide other benefits to employees that does not relate to the performance of their job, and from which the employer obtains no financial benefit, predominately benefit the employee, therefore they are not compensable work time under the FLSA.

Non-profit professional credentialing organization graders are “volunteers” under the FLSA. A non-profit organization who administers professional exams necessary for professional credentialing selects a group of its credentialed members to serve as exam graders for a period of 1 or 2 weeks, whereby they travel to testing locations to perform these services. The organization pays the direct expenses related to the graders’ travel. Graders report they perform the services willingly in the effort to give back to their professional community and to the credentialing organization. Under the FLSA, individuals who provide services to non-profit organizations may be properly classified as volunteers if they offer their services willingly without any expectation of compensation, free from any coercion or undue pressure. Under the circumstances presented by the credentialing organization employer, exam graders meet this standard and can be unpaid volunteers.

Internet payment software platform sales employees may be exempt from FLSA overtime. Employees may not be entitled to overtime if they 1) work in retail or service establishment, 2) earn a regular rate of pay that is more than 1 ½ times the applicable minimum hourly wage in a given workweek in which they work overtime, and 3) derive more than half of their earnings from sales commissions. This is known as the “retail and service establishment” exemption to the FLSA’s overtime provisions. The WHD found that an employer whose business is selling internet payment software platforms to retailers and others who sell products online, was considered a “retail sales entity” because it sold its platform directly to the user, in small quantities, for the user’s own use in business, rather than re-sale (such as wholesale sales). This was not changed by the fact that the employer’s sales are made predominately online. Accordingly, the organization’s employees who meet the earnings requirements above may be exempt from overtime.

Movie theater overtime exemption applies to in-theater-restaurants. The FLSA exempts from overtime all employees of establishments that are primarily engaged in the exhibition of motion pictures (the WHD defines “primarily engaged” to mean at least 50% of the available operation time is spent showing movies). The exemption applies to all employees of a qualified establishment, regardless of the work they perform. This recent opinion letter clarifies that movie theaters with in-theater dining, and even some with onsite, full-service restaurants, may qualify for the movie theater exemption if the food service is “functionally integrated” with the theater operations. Based on the facts presented in the letter, movie theaters with in-theater dining will qualify for this exemption if the food service and theater operations share common: 1) physical premises without a distinct barrier or separation; 2) business, financial, and other record keeping, such as entity name, taxes, and payroll; and 3) employees, and their primary source of revenue is showing movies.

The Massachusetts Noncompetition Agreement Act (see link, at Section 24L) (“MNAA”) effective October 1, 2018, places new restrictions on the length and applicability of non-compete agreements between employers and employees who work within the state of Massachusetts. (Note that the law defines employees to include independent contractors.) Post-termination non-competes are prohibited for (1) non-exempt employees, (2) employees who are terminated without cause (including as a result of a layoff), (3) interns and (4) minors. For other employees, non-competes are significantly restricted. First, non-competes are limited to a term of one year (except in the event of an employee breach of fiduciary duty to the company or theft of company property) and employers must compensate employees during this period of non-competition. The MNAA also limits the geographic scope of non-competition agreements and the types of post-termination activities employers may prohibit during the period of non-competition. Finally, the law imposes certain notice requirements upon employers. New employees must receive notice that a non-compete agreement will be required as a condition of their job offer either (1) before the job offer is communicated, or (2) 10 days prior to their first day of work, whichever is earlier. Existing employees subject to a new non-compete agreement must have at least 10 days to review the agreement.

Another new Massachusetts state law, referred to as the “Grand Bargain” due to the compromise reached through its enactment among various interested parties, contains several provisions affecting employers. First, the law establishes a higher minimum wage for all hourly employees. The state minimum wage for regular hourly workers, which is currently $11.00, will increase to $12.00 as of January 1, 2019, and gradually thereafter to a maximum of $15.00 by 2023. Tipped hourly employees, whose currently hourly minimum wage is $3.57, will see an increase to $4.35 on January 1, 2019, and gradually thereafter to $6.75 by 2023.

The Grand Bargain also eliminates the requirement for retail employees to be paid premium pay for work on Sundays and certain holidays; the premium pay requirement first decreases on January 1, 2019 (from 1.5 to 1.4 times the regular rate) and then decreases gradually over the next five years; it will be eliminated entirely by 2023.

Finally, the Grand Bargain establishes a state-wide program for paid family and medical leave. Effective January 1, 2021, employees may take:

Up to 12 weeks/year of family leave to bond with a newborn, newly adopted, or recently placed foster child, or to care for a family member with a serious health condition.

Up to 26 weeks/year of leave to address a qualifying emergency due to a family member’s call to active military duty, or to care for a family member who is a covered military service member.

Up to 20 weeks/year of medical leave per year for their own serious health condition.

While family, military, and medical leave are each considered separate leave allowances, not exclusive to one another, under the law, employers are only required to provide a maximum of 26 weeks of leave, in the aggregate, in any one benefit year. Wage replacement during these leaves is paid through a state trust fund, managed similarly to state disability benefits funds. Leaves under this law are job protected.

Earlier this year, Austin, Texas enacted a new city ordinance, under which all employees who work a minimum of 80 hours per calendar year within the City of Austin are entitled to accrue and use paid sick leave at a rate of 1 hour of leave for every 30 hours worked. Accrual and use of paid sick leave are both subject to annual caps, based on the employer’s size. Employers with 16 or more employees must provide a minimum of 64 hours of paid sick leave; employers with 1 to 15 employees must provide a minimum of 48 hours of paid sick leave. Employees may use paid sick leave for: (1) their own or a family member’s physical or mental illness, injury or health condition, or preventative treatment, or (2) absences due to medical treatment, relocation, or legal proceedings arising out of themselves or a family member being a victim of domestic or sexual abuse, or stalking.

The Austin ordinance was supposed to go into effect on October 1, 2018 for employers with 5 or more employees (October 1, 2020 for employers of up to 4 employees), however, on August 17, 2018 the Texas State Appellate Court temporarily enjoined the ordinance pending resolution of an appeal filed by parties including the Texas State Attorney General and employer interest groups. The lawsuit, originally denied on the merits by the Texas state trial court, alleges the ordinance violates state minimum wage laws. In granting the plaintiff’s injunction, the Appellate Court noted it was not ruling on the merits of the claim.

On August 16, 2018, just one day before the Texas Appellate Court ruling on the Austin sick leave ordinance, San Antonio City enacted its own paid sick leave ordinance, which largely mirrors the Austin sick leave ordinance. San Antonio’s ordinance is scheduled to become effective January 1, 2019. Smaller employers (5 or fewer employees) have until August 1, 2020, to comply. Given the ordinance’s similarity to Austin’s, it is likely destined for the same fate, whatever that ends up being.

Duluth, Minnesota Paid Sick Leave Ordinance

Following in the footsteps of the Twin Cities, Duluth, Minnesota enacted a paid sick leave and safe time ordinance that becomes effective on January 1, 2020. The law applies to all private employers with 5 or more employees nationwide. Workers are covered if they spend 50% of their work time performing services in Duluth or are based in Duluth. Under the law, employees accrue 1 hour of paid sick leave for every 50 hours worked, up to a maximum of 64 hours per year. Employees are limited to using 40 hours of sick leave per year, and may rollover up to 40 hours of accrued, unused leave to the following year. As with other sick leave laws, leave may be used for absences resulting from: (1) their own or a family member’s physical or mental illness, injury or health condition, including any diagnosis or preventative treatment; or (2) absences due to domestic or sexual abuse, or stalking.

New Jersey’s new Paid Sick Leave Act, which preempts the 13 local sick leave laws in New Jersey, becomes effective on October 29, 2018. Under the law, employers must provide 1 hour of paid sick leave for every 30 hours worked, but may cap accrual and use of this paid leave to 40 hours per year. Up to 40 hours of accrued, unused sick time carry over to the subsequent year. As with other paid sick leave laws, leave can be used for absences due to: (1) diagnosis, treatment, care, or recovery from their own or a family member’s physical or mental health condition, or for preventative care, (2) themselves or a family member being a victim of domestic or sexual violence, (3) the closure of the employee’s workplace or their child’s child care or school, if either are due to a public health emergency, or (4) school-related conferences, functions, or events for the employee’s child. Notably, employers who take adverse action against an employee within 90 days of an exercise of rights under this law are presumed to have retaliated against the employee, absent sufficient evidence to the contrary. Additionally, an employer’s failure to properly record leave time accrual and usage may result in a presumption that they failed to provide required leave.

New York City Sexual Harassment Mandatory Posting and Information Sheet Now Available

As you may recall from our prior post, beginning on April 1, 2019, New York City employers with 15 or more employees must establish policies and annual training meeting the requirements of the “Stop Sexual Harassment in NYC Act.” In connection with that law, on September 6, 2018, New York City employers must post new sexual harassment rights and responsibilities posters in English, Spanish, and other languages as applicable, and distribute an information sheet to employees at the time of hire. The New York City Commission on Human Rights has now released a copy of the mandatory posting, as well as the required information sheet.

Maryland Sexual Harassment Protections

Maryland enacted the Disclosing Sexual Harassment in the Workplace Act of 2018, which addresses contracts commonly used by employers to limit the potential exposure and publicity of sexual harassment claims. First, the law provides that, effective immediately, any provision in an employment contract or policy that requires employees to waive any future substantive or procedural right relating to a claim of sexual harassment or retaliation for exercising rights based on actual or potential sexual harassment is null and void. This includes the right to sue in court, making mandatory arbitration agreements that include claims of sexual harassment invalid under state law. (Note, however, that the Federal Arbitration Act, which the Supreme Court ruled protects employer arbitration agreements, may be found in the future to preempt this state law.) The Maryland law prohibits employers from taking adverse action against any employee who refuses to sign an agreement with an illegal waiver provision. The second component of this law requires all employers with 50 or more employees to provide a survey to the Maryland Commission on Civil Rights on July 1, 2020, and again on July 1, 2022, that includes the following: (1) the number of settlements it has entered into with an employee after the alleged sexual harassment, (2) the number of times in the past 10 years an employer has paid a settlement to resolve harassment allegations against a particular employee, (3) the number of settlements made after allegations of sexual harassment that contained confidentiality provisions, and (4) whether the employer took personnel action against any employee subject to any such settlement agreements. Employers’ survey submissions will be made available to members of the public, upon request.

Vermont Sexual Harassment Laws Designed to Increase Disclosure

The State of Vermont has also made efforts to eliminate sexual harassment in the workplace by passing An Act Relating to the Prevention of Sexual Harassment, which aims to increase accountability of employers subject to sexual harassment claims and settlement agreements. The law (which went into effect July 1, 2018), provides that agreements to settle a sexual harassment claim cannot contain a termination or no-rehire provision, and must expressly state that the agreement does not prohibit the employee from participating in any government or legal proceedings or exercising other legally-protected rights regarding sexual harassment claims. The law also prohibits employers from requiring employees to sign agreements as a condition of employment that waive rights to oppose, disclose, report, or participate in sexual harassment investigations, or other legally-protected rights or remedies provided under state or federal law regarding sexual harassment. Additionally, the law requires employers to provide a copy of the written sexual harassment policy to new employees at the time of hire and to promptly distribute any updates subsequently thereafter.

As we blogged earlier this year, in March 2018, the United States Department of Labor (DOL) announced a new program, referred to as PAID (or, Payroll Audit Independent Determination), under which employers may voluntarily apply for DOL assistance in resolving potential claims for wage underpayment under the federal Fair Labor Standards Act (FLSA). As previously discussed in our blog post, this pilot program will last six months, during which time the DOL will analyze how well the program meets the DOL’s desired goals, which include seeking to resolve wage claims faster, more thoroughly, and more cost effectively.

The DOL began accepting applications for the program on April 3, 2018. Also on that date, the DOL posted additional details on its website about the program. Some of the key points are:

The application process begins on the DOL website and requires employers to first participate in an on-line review of FLSA compliance materials. To gain access to these materials, employers must provide identifying information, including company name.

The DOL states that applicants not accepted into the program will not become subject to DOL investigation as a result of the information provided in the application unless there is a “health or safety risk.”

The DOL anticipates applicants will have a final claims determination within 90 days. Any employees to whom the DOL determines back wages are due must be paid by the end of the employer’s next pay period following the determination.

Any back wages owed to former employees that cannot be located will be sent to the United States Treasury.

Employers who participate in PAID but choose to privately resolve any related wage claims outside of the DOL process will not be able to obtain effective waivers of those employee’s FLSA claims, as such waivers require DOL approval.

Employers cannot resolve state wage claims simultaneously through PAID but may seek to resolve those claims separately with each employee.

Records pertaining to the PAID program, including applications and resolution documents, are not confidential and may be subject to the same Freedom of Information Act requests (and defenses) as other DOL investigation documentation.

Despite these clarifications, many employers are understandably wary about participating in the PAID program. As we mentioned previously, employees are not required to accept wage payments offered by employers through the PAID program, and may instead choose to pursue their federal claims in court, and thereby seek additional financial remedies. Employers also are concerned that notification to employees of past federal wage law violations may trigger mirrored claims against them under applicable state laws, which may have longer statutes of limitations than the FLSA’s two-year or three-year filing periods (e.g., state wage claims in New York and California, respectively, have six-year and four-year limitations periods). In any event, employers are advised to consult with legal counsel before engaging in an internal wage audit, which will help ensure the audit’s accuracy, legality, as well as allow employers to seek privileged legal advice on these issues.

In a case of straightforward statutory interpretation, the U.S. Supreme Court held on April 2, 2018 in Encino Motorcars LLC v. Navarro that service advisors employed at car dealerships are exempt from the overtime pay requirement under the Fair Labor Standards Act (FLSA).

The dispute began in 2011, when service advisors employed by Encino Motorcars, a Mercedes-Benz dealership in California’s San Fernando Valley, sued their employer for allegedly unpaid overtime compensation. The dealership moved to dismiss their lawsuit, relying on the exemption in Section 213(b)(10)(A) of the FLSA, which exempts employers of “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements” from the requirement to pay overtime compensation. The district court granted the dealership’s motion and the service advisors appealed to the Ninth Circuit Court of Appeals, which reversed. The appeals court found that the duties performed by the service advisors did not meet the language of the statutory exemption, as their jobs did not involve servicing of cars, but rather involved meeting and greeting car owners, soliciting and suggesting repair services to fix the customer’s problem as well as suggesting other maintenance and repair services, and providing owners with cost estimates. The dealership appealed the Ninth Circuit’s decision to the US Supreme Court.

The dispute before the Court centered on whether service advisors are “salesmen” “primarily engaged” in “servicing automobiles.” Encino argued that the service advisors’ tasks meet the exemption, as courts had routinely found for decades before the Ninth Circuit’s ruling in this case. The service advisors countered they should be eligible for overtime pay because they don’t sell automobiles and don’t engage in the manual labor of maintaining or repairing automobiles.

The five-justice majority opinion, authored by Justice Clarence Thomas, deemed it unnecessary to go beyond the plain language of the FLSA to resolve the issue. The majority easily concluded that service advisors are engaged in sales, thus meeting the definition of salesmen. They further found that service advisors are “primarily engaged” in “servicing” of cars because, in this context, servicing can mean “the action of maintaining or repairing a motor vehicle” or the “the action of providing a service,” and that service advisors meet both definitions because they are integral to the servicing process by performing their service sales functions, even if they do not themselves perform the actual repair services. Justice Thomas explained that the “ordinary meaning of ‘salesman’,” “is someone who sells goods or services … Service advisors do precisely that. … [S]ervice advisors ‘sell [customers] services for their vehicles.'”

The majority specifically rejected the need to look outside the text of the statute to reach a decision. “If the text is clear, it needs no repetition in the legislative history; and if the text is ambiguous, silence in the legislative history cannot lend any clarity.” The majority also rejected the Ninth Circuit’s position that exemptions under the FLSA should be narrowly construed, concluding that nothing in the statute gives any indication that exemptions should be given anything other than a fair reading. In the end, the matter boiled down to simple proposition: “If you ask the average customer who services his car,” Justice Thomas rhetorically posed, “the primary, and perhaps only, person he is likely to identify is his service advisor.”

The Court’s ruling is a major win for not only Encino Motorcars, but thousands of car dealerships nationwide. Had the Court ruled differently, the industry could have been liable for back pay for thousands of the employees who work with customers to help them with their car service and repair needs.

]]>https://www.employmentlawworldview.com/us-supreme-court-says-no-overtime-pay-for-auto-service-advisors/feed/0daniel.pasternak@squirepb.comU.S. Department of Labor Announces New Pilot Employer Self-Reporting Program To Address Overtime and Minimum Wage Violations (US)https://www.employmentlawworldview.com/u-s-department-of-labor-announces-new-pilot-employer-self-reporting-program-to-address-overtime-and-minimum-wage-violations-us/
https://www.employmentlawworldview.com/u-s-department-of-labor-announces-new-pilot-employer-self-reporting-program-to-address-overtime-and-minimum-wage-violations-us/#respondThu, 08 Mar 2018 19:09:05 +0000https://www.employmentlawworldview.com/?p=6503Continue Reading]]>On March 6, 2018, the U.S. Department of Labor (“DOL”) announced a new, nationwide pilot program which it claims will facilitate quick and efficient resolutions of Fair Labor Standards Act (“FLSA”) minimum wage and overtime violations by allowing employers to promptly pay back wages to employees and at the same time avoid time consuming litigation and fines. Cleverly named the PAID program (which stands for Payroll Audit Independent Determination), it will permit employers to self-report if they believe they have made errors in wage payments to employees under the FLSA. The DOL’s Wage and Hour Division will then assess the potential violations to determine how much the employer owes in back wages, and oversee the payments to any current or former employees to whom these payments are owed.

Under the program, employers will be expected to pay 100% of all outstanding wages owed. In other words, the PAID program does not provide an opportunity for employers to reach a compromise with employees on disputed wage claims. However, employers who participate in the program and resolve outstanding underpayments will be exempt from paying liquidated damages (which under the statute are an amount equal to the wage underpayment), penalties, and attorneys’ fees, which can often result from an enforcement action for FLSA violations.

Wage underpayments that are resolved through the PAID program will be considered final, and employees who elect to participate will be required to waive their rights to private legal action for the period of time addressed by the program. (There remains an open issue, however, as to whether the waiver will be as to all potential back pay claims, including those that could be brought under state law, or only under the FLSA.) However, employees are not required to resolve their wage underpayments through the PAID program, and they may choose to forgo any payments offered and thereby retain their private right to action against the employer (including any right to penalty payments). Furthermore, participation in the program will not foreclose a subsequent DOL investigation into an employer’s pay practices for other periods of underpayment not resolved through the program. Wage claims already subject to threatened or existing litigation, or under DOL investigation, may not be resolved through the PAID program, however, those employers may self-report about other potential violations not involved in those disputes.

Critics of the program express concern that employees will not get their statutorily-owed remedies, however, the DOL counterargument is that the PAID program serves to encourage employer compliance with the FLSA and ensure employees are promptly paid all wages owed. Secretary of Labor Alexander Acosta emphasized the PAID program serves to encourage employers to remedy existing underpayments to their employees, who without this program have no way of ensuring such resolutions without risking the potential of a legal battle and significantly more expense.

The program is only temporary at this point; it is set to last, initially, for just six months. At the end of this period, the DOL has said it will evaluate the program’s success and determine whether to continue it in the current or some modified form in the future. The program does not have an official start date, but check back here on our blog for updates once the DOL releases additional information. You may also subscribe here to receive email updates directly from the DOL.